244 F. 1 | 7th Cir. | 1917
(after stating the facts as above).
In apt language the counts set forth the scheme to represent that bankrupt debtors of the victim had fraudulently concealed assets, or that there were responsible secret partners; that seizures of property had been made or were about to be made for other creditors; that the collection would surely be made; and other of the alleged knowingly false and fraudulent matters and things above stated. We regard the contract as evidence tending to show the manner in which the fraudulent scheme to obtain money would be made effective, and as such unnecessary to be referred to in the indictment.
“The allegations all the way through indicate, however, that it [the agency] is a body of men that have been engaged in the collection business.”
This being so, the indictment sufficiently advised defendants that the “agency” had in some capacity the right to transact business, and could have participated in the execution of the scheme which defendants had devised. If in preparing their defense defendants needed to be more fully informed of tire legal capacity of the agency, motion for a bill of particulars would doubtless have elicited whatever, if any, further facts thereon the government possessed. Foster’s Federal
“Stromberg Motor Devices Co., Chicago, Illinois — Gentlemen: We are In receipt of advice from our solicitor ot the list of your present delinquent claims, that you had handed him, for the purpose of arriving at the basis for charge covering our service, and one of our special representatives will call upon you in the near future regarding the same. Thanking you for your courtesy in the matter, we beg to remain, very respectfully, Barr & Widen Mercantile Agency, F. D. Wendler, General Manager. April 23, 1912. Ir-30.”
Surely such letters advising of the receipt of the list of claims, and of the intended call of a special agent to closo a contract, show on their face they had some power or instrumentality in the execution of the scheme to defraud.
“That the defendants * * * unlawfully, etc., conspired, etc., together, * * * for the purpose of executing the said scheme and artifice to defraud « * * and attempting to do so, to place and cause to he placed letters in the post office.”
We regard this as sufficient averment of a conspiracy to use the mails in execution of the alleged scheme to defraud. Stokes v. United States, 157 U. S. 187, 15 Sup. Ct. 617, 39 U. Ed. 667; Emanuel v. United States, 196 Fed. 317, 116 C. C. A. 137.
In each of these counts the sending of letters of the same general purport as those heretofore referred to is charged by way of overt acts, and in counts 25 and 26 there are further charged as overt acts such things as sending lead cards, securing, lists of delinquent accounts, the meeting of certain of the defendants at particular places — all charged as having been done in pursuance of the conspiracy and to effect its object.
It seems clear that all such acts from their very nature may well have been influential in effecting the object of the conspiracy, and without here presenting analysis or discussion of counsel’s elaborate argument to the contrary, we find the counts sufficient in this respect.
Other objections to the indictment are urged with much detail of argument and authority, but they seem to be largely refinements of such matters as we have considered, and in most instances quite too hypercritical to serve as substantial and fatal objections to the indictment or any of its counts, which, upon careful consideration, we conclude duly and sufficiently advised defendants of the nature of the charges thereby preferred.
As 1o the authentication of the book, it appears that it was regularly kept in the Chicago office, where defendant Freeman was in control. Those who kept the book were his employés, and it may well be concluded that it was under his general direction that the book was kc.pt, although he made no entries in it. Freeman and the other defendants were interested in the book, in that it was the record of the realization charges, of which Wendlcr, Freeman, the solicitors, and the list men were to receive cei'tain proportions. The men who kept the book testified to the correctness of its entries, which were made as the checks were received, and even if the book wore required to be authenticated with the particularity of account hooks offered in evidence on behalf of those by or for whom they were* kept, we find such requirements to have been substantially complied with. But the book was offered and admitted rather in the light of an admission or declaration by the defendants or some of thorn, and as such the book would be sufficiently identified if shown to have been kept with the knowledge and under the general direction of defendant. Bettman v. United States, 224 Fed. 819, 140 C. C. A. 265.
And in this connection it may be noted that one line of defense consisted in showing by witness Salter the great volume of business which the agency had transacted — the many thousands of claims handled, and of dollars collected since the year 1901. And one item of evidence was a long list of realization charges aggregating many thousands of dollars, collected from concerns not in evidence as complaining, showing in each such case where collections had been made of at least two and
The relation of the contract to the transaction was well described in a letter of October 12, 1912, .from Preeman to agent Tappe, when, as trouble seemed to be brewing for the “agency,” he wrote:
“Relative to the contracts received, wish to advise you there has been still another change made in the contract, namely, as per sample herewith inclosed, and I understand this will be the final contract — at least, until the present agitation subsides. The firm has been compelled to make this change on account of certain statements made by the contract men regarding matters of fact relative to claims. If it were not for the fact that I have been on the firing line myself, and sold a great many contracts, I might be inclined to make the statement that it will be hard to close these contracts. My experience, however, teaches me that the contract has very little to do with it, and I think you will find this to be a fact after you get out on the proposition.”
It appears that in most instances an agent entering the service of the “agency” was required to acknowledge receipt of a printed circular called “Instructions to Solicitors,” in which it was stated, among other things, that the solicitor’s power was limited to soliciting and closing the printed contracts unchanged, and forbidding the use of testimonials except such as were supplied by the agency, and from securing business by other than “legal, legitimate, and truthful methods,” and from stating to prospective clients that the agency “has any knowledge whatever as to any matter of fact that would make possible or probable the collection at any time of any claim,” or that the “agency has made any investigation as to the collectibility of any claim prior to the closing of the contract,” or that the “agency will refund all or any part of the realization charge in case this agency fails to recover the amount of minimum recovery.” In the contract forms and on other stationery was also printed notice of the solicitor’s want of power to vary the form of contracts.
If all this has been in good faith, with expectation of observance of these instructions, it might carry inference of the innocence of wrongdoing of those in charge of the project, men like Preeman and Wend-ler; but if, on the other hand, these fulsome warnings and notices appear from the evidence to have been merely a hypocritical pretense devised and employed with the view only of protecting from possible evil consequences of the scheme, a foil to parry the charge of fraud in case of prosecution, the fraudulent scheme and purpose is thereby only intensified. That this was really “an anchor to the windward” to provide for safety in time of stress, the jury was well warranted in concluding from the evidence. On cross-examination by defendants’ counsel of different agents, letter after letter from Wendler was produced reproving the agent for making misrepresentations complained of, and threatening discipline and discharge; but few, if any, were for such cause discharged, none permanently, notwithstanding the constant stream of complaints coming to Wendler from the victims of the misrepresentations and promises of the very kind so peremptorily forbidden to be made in the “Instructions to Solicitors.” A significant instance occurred in 1909 when Preeman then a field man had been instrumental in obtaining a contract, with the result that shortly after-wards a letter from the victim reached Wendler calling attention to the representations which Preeman had made to secure it; whereupon
At times there was indeed reproof of agents, genuine reproof; but not because of the fact of misrepresentation, but the quality of it, in the rashness and imprudence displayed, as for instance, where an agent, utterly without any foundation in truth, stated that á certain named boat then alleged to be at a certain named dock was about to be attached by the agency, “and again that an automobile of a certain debtor would pass through a nearby point at a certain time in the near future and would be seized by the agency — all as inducements to the client to close at once so as to get in on' the proceeds. Of course, such representations were too specific and immediate to be at all consistent with safety, and for such gross imprudence reproof manifestly was well merited.
Agent after agent testified to being advised to pay no attention to such instructions and warnings; that these were merely for protection in case of trouble. And the agents themselves, when expressing worry about their own possible liability, were assured that whoever executed one of these contracts “signed away his life,” and that there could be no possible “come-back.” Two letters from Preeman to agent Myers, written in the early fall of 1912, well illustrate the utter hollowness of any pretense of virtue in these oft-reiterated instructions and warnings. One reads:
“You must adhere strictly to your printed instructions to solicitors signed by you and refrain absolutely from making any representations to any prospective client or patron that you or Barr & Widen Mercantile Agency have any knowledge of any kind or character as to any matter of fact regarding the collectibility of any claim or claims, or that any claim of client or patron had been investigated prior to execution of contract.”
And the other:
“Relative to instructions to solicitors which you inclosed, duly signed, wish to state that it does not amount to a row of pins, and you are not signing away your life, as you say. They have received enough complaints about you. and Kaiser, and I have been instructed several times to discharge both of .you, which I did when I was in Phila., but as you have been subsequently reinstated, of course it has been necessary to have new instructions. Do you get me?”
But the plan of operation itself clearly shows that it was not intended nor expected that these instructions and notices would be complied with; else what possible purpose did the lead cards serve? Why did the principal defendants, at the expense of so much effort and money,
“Up to three years ago we secured business in the samo manner as other agencies do as we had no leads.”
The conclusion is irresistible that the “leads” were devised as a basis for the false, but alluring, tales which this large company of trained agents with singular sameness relate^ all over the country, to induce creditors of bankrupts to part with large sums in the hope of realizing on claims they had long regarded, as in fact they were, irretrievably lost. In the elaborate briefs and arguments no possible function for the “leads” is suggested, other than as the vehicle for the plausible presentation of gross untruths to further the mulcting of gullible business men. The very list plan and Wendler’s letters acknowledging receipt of the lists, indicate that prior investigation of the list claims would he made to give a basis in each case for the terms of a contract which would be submitted; and when the contract was presented the victim was led to believe that investigation of ¡be collectibility of the claims had in fact been made, and that it was this factor which entered largely ino the fixing of the amount of the realization charge stated in the contract, although in truth no investigation of any kind was ever made, or intended to be made. These instructions and warnings, therefore, far from exculpating the defendants, only fortify the conclusion that there was here a premeditated scheme of widespread and profitable deception.
The real and ultimate “service” contemplated as the result of the false representations was the collection of the old and delinquent un-collectible accounts. If the fact of intention to send letters in each case demanding payment of the listed claims will obviate the implication of the defendants “having devised a scheme or artifice to defraud,” a more effective investment in envelopes, form letters, and postage
It is evident that the only thing intended to be done, or in fact done, towards collection, was the sending out of the form letters demanding payment, and then after a time, if the client manifested impatience at the delay in the realization of the promises and expected results, another letter or two, all at trifling cost, practically nothing compared with the payment made, the defendants all the time well knowing that neither such puny effort, nor any effort, could by any possibility bring any degree of success.
Defendants’ counsel place much stress on the voluminous evidence of collections made and work done by the agency as bearing on the good faith of the defendants. It was testified that from 1901 to 1912 accounts collected by the agency amounted to about $650,000; that the agency had a list of lawyers all over the country to whom claims might be sent, and a force at St. Louis which made effort to collect every claim which came to the agency. As to the total of the collections in these 11 years (most of the time being before this “realization charge” scheme was 'conceived), it may be said that, where clients sent to the agency their current collections accruing after the contract was made, the ordinary results in the handling of such accounts, as might reasonably be expected, were achieved. Undoubtedly attempt was made to collect all such, particularly as regular collection commissions or fees were to be paid the agency for each collection, wholly aside from the “realization charge.” But as to the stale accounts concerning which the untruths were put forth, it can make no material difference that it was really intended there should be sent out letters demanding payment, or that, if subsequently other accounts are sent in, effort will be made to collect them. The evidence discloses no rational purpose in sending out the letters about the stale bankrupt claims, except perhaps to provide some proof of good faith in the transaction in case
“It is not necessary to criminality under the act that nothing whatever is to be given in return for the money.”
The “minimum recovery” clause of the contract is urged as further indicating fairness of the transaction; it being contended that through it, if the collections made did not equal the minimum recovery stated in the contract (usually fixed at four times the realization charge), a certain amount would be returned to the client. From casual reading it might be concluded that such was the effect of the clause, but analysis and comparison with other parts of the paper shows it to be a mere collocation of words and phrases signifying nothing. Whatever right in this respect it seems to confer on the victim appears to be at the option of the agency, to refund, or to continue its service to the client for another year, the client, of course, receiving back none of the realization charge, and the agency continuing its “service” for yet another year, the client being bound for that additional time to send in all of its current delinquent accounts for collection at usual rates, to a concern whose operators had already fraudulently separated him from a substantial amount, under the guise of a “realization charge.”
“They could accomplish their objects only through the use of the mails and through the use of the mails has come this condemnation under a federal statute.”
10. Complaint is made that the court did not charge the jury in accordance with certain requests for charges made on behalf of the defendants. In so far as such requests are not covered by the charge which the court gave, they .refer to the contract and its asserted influence on the issues herein as contended for on behalf of defendants. This we have already considered in dealing with that subject, and it need not be further discussed in this connection. The charge which the court gave was not objected to, but we find no material error in it, neither in what it includes, nor in what it fails to include, it being particularly urged by counsel (though no such objection was made at the time) that the charge did not sufficiently present the case to the jury.
“Thus the counts for conspiracy, on tlio one hand, and those for aiding and abetting unlawful carriage of explosives, oil the other hand, cannot rightly be defined as ‘interdependent,’ nor were both charges either proved or provable by the same evidence, as contended; and the further contention that commission of the offenses averred in the last-mentioned counts was relied upon and involved for conviction under the conspiracy counts is unsupported by the averments in such counts, wherein neither of such commissions of offense is set forth in the specification of overt acts, so that no question arises whether their averment therein as overt acts would affect the rule above stated as to the independent, nature of the other counts. Undoubtedly the evidence introduced in support of the conspiracy charge may weli serve as evidence tending to support the charges of aiding and abetting commission of the offenses averred in the other counts; but this coincidence in part gives no support to either contention of identity of the offenses charged, or of identity of the evidence involved for conviction. It is obvious that proof to convict of commission of the unlawful carriages, as aiders and abettors, must extend beyond the requirements for proof of the conspiracy.”
The situation there does not differ materially from what here appears. Here, as there, is found the coincidental fact that the evidence to prove the scheme to defraud serves also as evidence tending to support the conspiracy charge. Under section 215 an actual use of the mails is essential to conviction. Under section 37 the overt act to complete the offense may be any act. It may be mailing a letter or anything else. If the act charged and proved as the only overt act under section 37 were the mailing of a letter, and the same letter only was charged and proved as the letter mailed in execution of a scheme to defraud alleged under section 215, it may well be that the mailing of the one letter, completing as it would an offense under section 37, and at the same time an offense under section 215, would not admit of the defendant’s conviction and punishment under more than one charg'e, so proved; and such state of facts would well justify the doubts expressed by Judge Denison in the recent case of Hendrey v. United States, 233 Fed. 5, 147 C. C. A. 75.
But that is not the situation with which we are dealing. The conspiracy counts do set forth as overt acts the mailing of letters, some of which appear in counts under section 215; yet each of the conspiracy counts set forth as overt acts the mailing of letters not set out in the counts under section 215 as the letters mailed in execution of the scheme. Counts 25 and 26 further charge as overt acts, other things, such as procuring lists, sending out lead cards, and meeting together, or of mailing letters other than letters charged and proved as complet
While we have confined our discussion to those contentions we deemed most important, we have given consideration to all the points raised, and from a perusal of the record and study of the extended briefs and the arguments, oral, printed and written, we conclude no error appears which would justify disturbance of judgment as to any of the defendants.
Judgments affirmed.